Formation of embryonic mesoderm is a critical early step in vertebrate embryogenesis. Nodal members of the TGF[unreadable] family of signaling factors are essential for mesoderm formation and a variety of other developmental processes. Given these diverse developmental functions and the ability of Nodal to reinforce its own expression by positive feedback, precise control of Nodal signaling is essential for normal development. To restrict Nodal activity, multiple antagonists of the Nodal pathway are expressed in the vertebrate embryo. A central goal of this proposal is to define the mechanisms that modulate Nodal pathway function to establish the spatial organization of the embryonic mesoderm. We have identified novel functions for two Fox family genes in regulating the Nodal signaling pathway during Xenopus mesodermal development. FoxD3 functions in the Spemann organizer to repress negative regulators of Nodal expression and promote mesoderm formation. Fasti (FoxH1), a transcriptional mediator of Nodal signals, unexpectedly binds to Groucho corepressors to inhibit Nodal mesoderm induction and autoregulation. This suggests a role for Fasti-Groucho4 in silencing the Nodal pathway outside of the mesodermal domain. To determine how FoxD3 and Fasti modulate the Nodal pathway three Aims are proposed: 1) developmentally important targets of FoxD3 will be identified by analysis of microarray screen candidates, and by defining factors that mediate the Nodal transcriptional response to FoxD3 and 2) the Fasti-Groucho4 complex will be analyzed biochemically, transcriptionally, and developmentally to determine its role in mesoderm formation and Nodal pathway regulation. These studies will elucidate conserved mechanisms of vertebrate embryogenesis, and define a transcriptional network for the Nodal pathway that may reveal general mechanisms for regulating other TGF[unreadable] signaling pathways. FoxD3 also maintains pluripotency of stem cell lineages, and the proposed mechanistic studies may contribute to a better understanding of stem cell biology. Furthermore, given the role of FoxD3 in neural crest development and disease, and the potential role of Fasti-Groucho in modulating proliferative control by TGF[unreadable] signals, these studies also have significance for understanding human diseases of the neural crest and cancer.